Full papers
Does Active Return of Indian Mutual Funds Maximize Investors Return (214)
Author/s: Debaditya Mohanti
Track: Corporate Governance
Paper Type: Full Papers
Keywords: Return-Based Style Analysis, Rolling-Period Exposure Analysis, Style Benchmarks, Large-cap Equity Mutual Funds
Abstract: While investing in mutual funds made it possible for retail investors to cherish the benefits of diversification and competencies of fund managers however, these benefits have not been without costs. Therefore, investors whether retail or institutional must scrutinize and evaluate the performances of various mutual funds particularly where the investments have been made in order to create the most effective asset mix. The purpose of the present study is to examine the investment style of the large cap equity mutual funds in India using Style-Exposure analysis proposed by Sharpe 1992. The study uses the constrained quadratic optimization factor model on the monthly returns of large-cap Indian equity mutual funds and their relevant style indices for analyzing the investment style and stock picking ability of the fund managers over a period from January 2011 to April 2015. To capture the style of these funds, eighteen mutually exclusive domestic and international asset classes have been taken as the style benchmarks in the present study.
Further, to assess the dynamic drift in the style of a fund, a rolling period exposure style analysis of the funds have been carried out by using a thirty six month rolling period window computed monthly. The study analyses the selection capability of each of the fund manager by computing a mean statistics of excess active return of the funds referred as Mean Selection Return. The results of the study show that the fund managers exhibit some level of active management rather than passively tracking the style benchmarks and also depicted a good selection capability. However, results also portray that active management and good selection skills are in conjunction with the higher expense ratio of these funds. Further, the rolling period exposure analysis displayed a good amount of style consistency among all these mutual funds over the given period of time.
The Commercialisation of Microfinance Institutions (MFIs) in Developing Countries and Financial and Social Performance (216)
Author/s: Sanjib Sherpa Tolu Olarewaju
Track: Corporate Governance
Paper Type: Full Papers
Keywords: Microfinance, Commercialisation, Developing Countries, Panel Data Analysis, GMM
Abstract: In recent years, microfinance institutions MFIs have grown rapidly. Traditionally, it was set up as a strategy to fill the gap between the supply and demand for credit to poor households that enable income generating activities and eventually improve living standard. Therefore, it was mostly non government organisations NGOs. However, in the last decade, there has been an increasing trend of commercialisation in the microfinance industry. As a result, a lot of commercial MFIs started to appear but little is known about whether the industry and clients are benefited from commercialisation. Therefore, this study has investigated the relationship between the commercialisation and performance of MFIs of microfinance using comprehensive data drawn from 114 countries over the period 2002 to 2016 using a dynamic panel data analysis method. This study finds that commercialisation does not have a significant effect on the financial performance of MFIs but have a significant negative effect on social performance. Further, this study has also examined the factors that drive the performance of MFIs.
Whos in Charge In whose Interest The Experience of Ownership and Accountability in the Charity Sector (273)
Author/s: Donald Nordberg
Track: Corporate Governance
Paper Type: Full Papers
Keywords: Charity boards, non-profit organisations, directors, trustees, boards
Abstract: In the UK as in other countries, charities are companies, bound by company law as well as regulatory constraints of the non profit sector. Many are tiny, micro businesses, but others are sizeable enterprises and several hundred employees and thousands of beneficiaries. All but a few are led by voluntary boards of directors trustees, and in many of those the trustees are also the members of the company, that is, the legal owners of the business, as shareholders are in conventional companies. This paper explores the literature of charity boards and governance and reflects on recent personal experience of boards to develop a research agenda to expand our understanding of the puzzles associated with the question Who's in charge?, as well as to elaborate a typology of interests the governance of the sector serves.
Why Does CEO Turnover Lead To CFO Turnover? (517)
Author/s: Bakhtear Talukdar Sabur Mollah Suchismita Mishra
Track: Corporate Governance
Paper Type: Full Papers
Keywords: CEO turnover, CFO turnover, CEO succession
Abstract: After the enactment of SOX 2002, the role of CFO has become increasingly important. An extant body of literature suggests that CFOs leave office within 6 12 months of the CEOs departure, but the literature is scarce on why CEO turnover leads to CFO turnover. The aim of the study is to investigate whether CFO turnover is a matter of a course of CEO turnover or is a consequence of CEO succession. We show that CFO forced turnover is not merely an effect of CEO turnover, but rather a consequence of forced CEO turnover. We also find that professionally qualified CFOs are mostly likely to be forced out of office within a year of forced CEO turnover. We also reveal that dependent CFOs are most likely to experience forced turnover following CEO forced turnover. We also show that externally succeeding CEOs are unlikely to remove the CFOs immediately after they take office because they need time for their learning curve. Our study makes important contributions to both power circulation theory of control and upper echelons theory of CEO succession. Our study indicates that appropriate governance reforms can help establish effective executive disciplinary mechanisms in US firms.
Ambiguity in The Regulation-Corruption Interface: The Development a Philosophically- Based Holistic Model (591)
Author/s: David, Alastair Coldwell
Track: Corporate Governance
Paper Type: Full Papers
Keywords: corruption, regulations, holistic model, philosophical
Abstract: Discussions on governance often focus on regulations without much consideration of the individuals responsible for implementation, and the socio-economic and sociopolitical circumstances in which they arise. The issue of effective governance is unlikely to be simply a question of the quantity or quality of regulations built to maintain and protect corporate governance. The general genuflection of economic and political authorities to simply increase the amount of regulations when confronted by financial and economic corruption needs to be changed, and the moral characteristics of managers, interpersonal trust, the prevailing socioeconomic and sociopolitical circumstances of a country at a particular moment in time, all need to be carefully considered and analysed. To this end, the study develops a holistic regulations-corruption conceptual model and illustrate its utility with examples of specific countries.
The Quality of Board Decision Making Processes in Higher Education Institutions: UK and European Experiences. (592)
Author/s: Oliver Marnet Teerooven Soobaroyen
Track: Corporate Governance
Paper Type: Full Papers
Keywords: HEI, board-governance, decision-making, bias.
Abstract: We review governance (CG) practices in Higher Educational Institutions (HEIs) in the UK and in selected European Union countries with a focus on the quality of strategic decision-making processes at the level of governing boards. To this end, we interviewed key players in HEI governance, supported by board observations, discussions with board members, and secondary data analysis. With direct insights gained from over 30 semi-structured interviews with board level individuals of six UK and five EU HEIs, supported by passive observations of board meetings, we examine factors affecting the quality of strategic decision-making, with a particular focus on board member awareness of the impact of heuristics and cognitive biases on their judgement.
In a context of increasing challenges, uncertainties and expectations facing the UK and the EU HEI sector, we seek to establish whether boards regularly adopt active processes to mitigate bias in reviewing or approving plans set out by executive university management. After reviewing the evidence collected, we conclude that instances of reflection on ways to arrive at better decisions, constructive reflections on past outcomes, learning from past mistakes, and awareness of the importance of bias mitigation procedures during deliberations appear haphazard in nature, isolated in occurrence, and almost exclusively accidental.
Exploring Why Organisations Differ in Board Configuration Do Organisations Age, Size And Their Years Being Public Matter Findings From Greek Listed Manufacturing Organisations (601)
Author/s: Ioannis Gkliatis Konstantinos Athanasiadis Dimitrios Koufopoulos Eleftheria Florou
Track: Corporate Governance
Paper Type: Full Papers
Keywords: board configuration, organisational characteristics, independent directors, board leadership structure, organisational age, organisational size
Abstract: In this paper building upon several theories agency theory, stakeholder theory and resource dependence theory and by utilising data from 161 Greek manufacturing companies that were listed in the Athens Stock Exchange on the 31st December 2008, we explore the relationships between the organisational characteristics of the firms organisational age, organisational size and years listed in the stock market and the Board configuration board size, board leadership structure and directors dependence independence. Both descriptive and inferential statistics ANOVA tests were utilised to answer the research questions. Interestingly and in alignment with the literature, the findings showed that larger organizations tend to have larger boards and greater proportions of external and independent directors. However, no more strong relationships have been identified between the organisational characteristics and the board configuration. Finally, it is worth mentioning that this study examines the listed Greek manufacturing companies during very turbulent times, the start of the financial crisis in Greece, which may have an impact on the configuration of the boards at that time.
Conceptualising Corporate Governance and Corporate Social Responsibility: A case study of Crude Oil Corporations in the Niger Delta Region of Nigeria (617)
Author/s: Robert Okere Nobert Osemeke
Track: Corporate Governance
Paper Type: Full Papers
Keywords: Nigeria, Corporate governance, CSR, Stakeholders
Abstract: Although there are some similarities in the conceptualisation and application of the notion of Corporate Governance and CSR, there are also key differences as revealed in the 31 interviews conducted in Nigeria and the UK involving a diverse range of people and organisations including, policy makers and regulators, politicians, senior managers and crude oil company executives, community leaders, academic experts, practitioners, business men, NGOs and Church leaders. The data collected were analysed using content analysis leading to key thematic findings linked to the meaning of corporate governance, and the development of a framework which provides a deeper conceptual and empirical understanding of the nature of corporate governance in the Nigerian context. The responses from participants provide deeper insights into how they understood corporate governance and corporate social responsibility in the context of organisational purpose vis a vis the performance of the Multinational Oil Corporations operating in Nigerias crude oil industry. This study found that the Multinational Oil Corporations definition of corporate governance was flawed. While the study argues that corporate governance should not only enable managers to maximise profit, it concludes that visible engagement in CSR for host communities is paramount for long term survival of crude oil corporations in the Niger Delta region and the rest of the world.
An Examination of Governance Typology in Nigeria Higher Education System (667)
Author/s: Abdulazeez Abioye Lawal Waid Adeniyi Akingbade Hameed Omotola Ojodu
Track: Corporate Governance
Paper Type: Full Papers
Keywords: Keywords: Corporate governance, Nigeria higher education institutions, Stakeholders, Education system, Performance
Abstract: Nigeria higher education institutions (NHEIs) are facing several challenges that border on corporate governance (CG) practices. This paper explores CG culture and its challenges in NHEIs. A qualitative research method was employed through structured interviews of some NHEIs stakeholders and extensive desk-based research. The results of the interviews and content analysis of operational documents such as the enabling laws, government directives and policies, institutional websites and some media releases of these institutions revealed the adoption of a number of internal and external corporate governance structures and non-existence of disclosure of application of CG principles. Challenges such as inadequate funding, excessive interference by government, domineering influence of unions, faulty composition of CG constituents and leadership to mention just a few are affecting effective governance in these institutions. Hence, proper funding, leadership training, empowerment of these institutions and complete disclosure of application of CG practices are recommended.
Entrepreneurial financing under uncertainty :Performance Comparison Between ROMCA and Conventional Microloans using Agent Based Simulation (725)
Author/s: Adil ELFakir Mohamed Tkiouat Khalid Allam
Track: Corporate Governance
Paper Type: Full Papers
Keywords: ROMCA, social value, PLS contract, Conventional lending, Microfinance.
Abstract: In this research we create a complex simulation environment where we compare the performance of two micro-financing modes in a group lending context under uncertain market and price conditions : A classical conventional mode and a proposed Profit and loss sharing model called ROMCA (Rotating Musharakah). Both models are based on group lending of entrepreneurs over a specified period. We identify four cases of market and price conditions and use Netlogo as a simulation tool to assess the performance of the two modes in terms of employment , enterprises , investment , tax proceeds and wealth creation. We found a simulation evidence that ROMCA performs better than conventional lending in terms of creating wealth, new enterprise (and therefore new employment opportunities) and better consumption level even under adverse market conditions. On the other hand, Conventional lending is found to dominate ROMCA in terms of employment under favorable market condition.
Non-financial Information Disclosure: Corporate Government and new challenges (796)
Author/s: Herenia Gutierrez-Ponce Julian Chamizo-Gonzalez Nuria Arimany-Serrat
Track: Corporate Governance
Paper Type: Full Papers
Keywords: non-financial information, financial information, IBEX 35, corporate governance, Directive 2014/95/EU, public-interest entities
Abstract: Directive 2014/95/EU on Disclosure of Non-Financial Information requires public-interest entities (PIE) and large companies with over 500 employees to present a non-financial report in 2018 on environmental, social, and corporate governance aspects relating to the 2017 fiscal year. The study details the transposition of Directive 2014/95/EU into the Spanish legal system and demonstrates the current visibility of such non-financial information on the websites of the IBEX 35 companies in line with international, European and national regulations, with special reference to corporate governance. In addition, it evidences the need for a non-financial report with greater web transparency by these entities. It also analyses whether the IBEX 35 companies with the best financial indicators have better non-financial indicators and web communication.
The Management Control Portfolio Set to Handle Our Governance Challenges (915)
Author/s: Alf Westelius Ann-Sofie Westelius
Track: Corporate Governance
Paper Type: Full Papers
Keywords: Governance challenges, Governance ideals, Management-control families, Human-centred organising
Abstract: We present an ecology view of management control tools and concepts as a way to capture the dynamics in the field and grasp where they come from. In so doing, we propose an alternative way of structuring management control terms into families, according to governance challenges addressed, to provide an overview of the field and facilitate an analysis of the dynamics. We start on such an analysis with both historical examples and attempts at looking forward. The proposed structure does not reveal any clear group of concepts or tools for sustainable management control. Therefore, we draw on a model for human-centred organising to guide the assessment of imbalances and the sustainability of management control packages. Exemplifying with current organisations, we demonstrate that from a narrow organisational perspective, human-centred control is not necessary for success or survival; strict economism can work for a high-profiled company, even if it appears to be detrimental for society. And value-based, trusting, non-monitoring management control also seems to be for particular, high-profiled (and possibly not very large) companies, rather than a realistic mainstream alternative in our mainstream world. We end by identifying plausible trends and future challenges for management control.
Relationship Between Corporate Governance And Managerial Efficiency In Nigeria Public Corporations (1002)
Author/s: Barbara Ofuani Sunday Adebisi
Track: Corporate Governance
Paper Type: Full Papers
Keywords: Corporate Governance, Managerial efficiency, Public Corporations, Stakeholders
Corporate governance importance in ensuring compliance with procedures, rules and regulations for efficient delivery of public corporation in developing nation has become a very important discussion among scholars, due to growing governance failure, indicated by collapses of erstwhile large state corporations across the globe. Unethical business conduct, corporate governance abuses and managerial inefficiencies have been seen to pervade most operations of public corporations in Africa. This paper therefore addressed corporate governance practices and managerial efficiency in some selected public corporations in Nigeria. Data were obtained from the Lagos offices of the selected six public sector establishments with a questionnaire instrument, using a multi staged sampling technique purposive and stratified. Data were analysed using Duncans Post Hoc tests, Correlation Regression models and ANOVA test. The results of the tests showed that Nigerian Public corporations partially comply with code of corporate governance practices and that there exists a positive relationship between corporate governance and managerial efficiency. The paper concludes that strict compliance with existing code of corporate governance is important and that, structures should be established to ensure sound ethical climate for managerial efficiency to the satisfaction of all stakeholders
Using Distribution Strategy as a Complementary Corporate Governance Instrument for the Insurance Industry, How Efficient in the UK? (1093)
Author/s: Tony Abdoush
Track: Corporate Governance
Paper Type: Full Papers
Keywords: Independent Intermediaries, Distribution Strategy, DEA Efficiency Scores, Corporate Governance, United Kingdom
Abstract: Distribution for an insurance company is considered one of the key success factors, where the chosen distribution strategy would significantly affect an insurers profitability on the long run. Applying the non parametric data envelopment analysis DEA, the aim of this study has been taken a different perspective to examine the extent to which the choice of a specific distribution strategy, namely Independent Intermediaries, would improve firm efficiency, by reducing agency conflicts between policyholders, managers, and shareholders. In other words, would a specific distribution strategy act as complementary corporate governance instrument in insurance companies, in the UK during the period 2004 2013 The main findings show that a significant positive association between corporate governance, estimated by the newly built corporate governance index UKCGI, and firm performance, measured by the DEA efficiency scores, has been confirmed in stock companies. In the second stage, the results revealed that although multi channel insurers have higher scale efficiency compared to other single strategies, using Independent Intermediaries as a distribution strategy does play a vital role as a complementary corporate governance instrument, which improve firm efficiency, with strong evidence for stock companies, but with weaker evidence for mutuals.
Corporate Governance Practices and Firm Performance in the UK Insurance Industry, Does This Relationship Hold True During Financial Distress? (1117)
Author/s: Tony Abdoush
Track: Corporate Governance
Paper Type: Full Papers
Keywords: Corporate Governance, Firm Performance, Insurance, Listed and Non-Listed, Financial Crisis
Abstract: Past empirical studies in corporate governance have focused on non financial companies, and mostly in the US, while few within financial firms have investigated corporate governance in the banking industry, and much fewer in the UK. However, a scarce number of studies, with no recent studies, have attempted to systematically explore the effect of corporate governance in the UK insurance industry, taking into account the Comply or Explain approach to corporate governance, compared to legislation based approach in the US. In this study, the main aim is to examine the impact of corporate governance arrangements on firm performance of the UK insurance industry, and whether listing status and or financial distress make any difference
This study contributes to the literature first by a manually collected dataset for both listed and non-listed insurance companies in the UK over a longer period of time stretching between 2004 and 2013. As far as the researcher is aware, this study is also the first to using two new insurance-related performance measures, revenue growth ratio and adjusted combined ratio, in order to compare the effects of corporate governance arrangements implemented among listed and non-listed insurance companies, as well as before, during, and after the Financial Crisis of 2008.
Using a sample of 67 UK insurance firms during the period 2004-2013, the main findings show that board non-duality and the presence of a majority shareholder, but with a local audit firm with less independence ratio, improve firm performance in insurance companies. Furthermore, the findings for the sub-samples indicate a stronger association between corporate governance and firm performance in listed insurance companies during the financial crisis of (2007-2009), and afterwards.
Ethics in Stakeholder Engagement for Successful Organizational and Project Management- A Systematic Review (1073)
Author/s: Kamil Okedara Paul Chan Bill Collinge Obuks Ejohwomu
Track: Corporate Governance
Paper Type: Full Papers
Keywords: Ethics, stakeholder engagement, business management
Abstract: Stakeholder engagement or management (SE) has been variously discussed. Most studies tend to view the discussion on ethics and stakeholder engagement at a point in time. However, what is less known and which has significantly not been studied is how ethics in stakeholder engagement changes overtime for benefits of both projects, business and organizations. This paper therefore examines how ethics is considered in studies of stakeholder engagement in the management of business, organizations and projects.
To be able to generate findings for both academics and practitioners, we have employed a systematic reviews of 57 studies across geographical locations, spanning various fields to discover the gap. This is in addition to studying the evolution of definitions and perspectives studies have come up with over the years
The moderating role of Negative Media Spotlight on the relationship between Accrual Based Earnings Management and Real Earnings Management: Evidence from the UK Listed Companies (1190)
Author/s: Saadia Irfan
Track: Corporate Governance
Paper Type: Full Papers
Keywords: N/A
Abstract: This paper empirically tests the substitution hypothesis of a negative relationship between the amount of real earnings management and accrual based earnings management on a sample of UK firms from 2003 to 2017. I show that contrary to prediction, the higher level of accrual based earnings management is associated with higher level of real earnings management. However, this relationship is moderated by negative media spotlight; suggesting that firms with negative media coverage tend to substitute real earnings management with accrual based earnings management while firms without negative media spotlight do not. These results hold true for various robustness checks. Further analysis reveals that the moderating effect is only pronounced in firms with positive profitability; thereby suggesting that firms with losses tend to engage in both real earnings management and accrual based earnings management even in the presence of negative media limelight.